- 20 Marks
FA – L1 – Q74 – Preparation of limited liability company financial statements
Question
The list of balances of Pakasa Bepo Industries Limited shows the following balances at 31 December 20X9.
| Dr | GH¢000 | Cr | GH¢000 |
|---|---|---|---|
| Inventory (goods for resale) at 1 January 20X9 | 330 | Share capital (600,000 shares) | 300 |
| Revenue | 1,000 | ||
| Purchases | 484 | ||
| Purchases returns | 60 | ||
| Sales returns | 28 | ||
| Carriage outwards | 28 | ||
| Warehouse wages | 80 | ||
| Sales representatives salaries | 60 | ||
| Administrative wages | 40 | ||
| Warehouse plant and equipment – cost | 126 | ||
| Accumulated depreciation – 1 January 20X9 | 50 | ||
| Delivery vehicle hire | 20 | ||
| Goodwill | 100 | ||
| Distribution expenses | 10 | ||
| Administrative expenses | 30 | ||
| Directors’ salaries (charge to administrative expenses) | 30 | ||
| Rental income | 16 | ||
| Trade receivables | 60 | ||
| Cash at bank | 60 | ||
| Trade payables | 60 | ||
| Total | 1,542 | Total | 1,542 |
Additional Information
(1) Inventory (goods for resale) at 31 December 20X9 amounted to GH¢100,000.
(2) Annual depreciation on warehouse plant and equipment of GH¢32,000 should be provided.
(3) Income tax for 20X9 should be taken as GH¢50,000.
(4) Goodwill is to be written down to GH¢90,000.
Required:
Prepare the company’s statement of profit or loss for the year to 31 December 20X9 and a statement of financial position at that date in accordance with IAS 1 Presentation of Financial Statements.
Answer
Pakasa Bepo Industries Limited
Statement of profit or loss for the year ended 31 December 20X9
| GH¢000 | GH¢000 |
|---|---|
| Revenue (1,000 – 28) | 972 |
| Cost of sales (W) | (484) |
| Gross profit | 488 |
| Other operating income | 16 |
| Distribution costs (W) | (230) |
| Administrative expenses (W) | (100) |
| Profit before tax | 174 |
| Income tax expense | (50) |
| Profit for the period | 124 |
Statement of financial position as at 31 December 20X9
| GH¢000 | GH¢000 |
|---|---|
| Non-current assets | |
| Plant and equipment (126 – 50 – 32) | 44 |
| Goodwill (100 – 10) | 90 |
| 134 | |
| Current assets | |
| Inventories (goods for resale) | 100 |
| Trade receivables | 60 |
| Cash | 60 |
| 220 | |
| Total assets | 354 |
| Capital and reserves | |
| Share capital | 300 |
| Share premium | 20 |
| Revaluation reserve | 20 |
| Accumulated profits (50 + 124) | 174 |
| 514 | |
| Current liabilities | |
| Trade payables | 60 |
| Income tax | 50 |
| 110 | |
| Total equity and liabilities | 624 |
Workings
| Cost of sales | GH¢000 |
|---|---|
| Opening inventory | 330 |
| Purchases | 484 |
| Purchases returns | (60) |
| Closing inventory | (100) |
| Depreciation | 32 |
| Warehouse wages | 80 |
| Total | 484 |
| Distribution costs | GH¢000 |
|---|---|
| Carriage outwards | 28 |
| Salespersons’ salaries | 60 |
| Delivery vehicle hire | 20 |
| Distribution expenses | 10 |
| Warehouse wages | 80 |
| Depreciation | 32 |
| Total | 230 |
| Administrative expenses | GH¢000 |
|---|---|
| Administrative wages | 40 |
| Administrative expenses | 30 |
| Directors’ salaries | 30 |
| Write down of goodwill | 10 |
| Total | 100 |
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